Responsibility Accounting: Equipment Breakdown
How should a responsibility-accounting system handle each of the following scenarios?
l. Department A manufactures a component, which is then used by Department B. Department A recently experienced a machine breakdown that held up production of the component. As a result, Department B was forced to curtail its own production, thereby incurring large costs of idle time. An investigation revealed that Department A’s machinery had not been properly maintained.
2.Refer to the scenario above, but suppose the investigation revealed the machinery in Department A had been properly maintained.
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